Mt. Ascutney Hospital & Health Center Budget Presentation Green Mountain Care Board August 25, 2016
Presenting • Gay Landstrom, Interim Chief Executive Officer • David Sanville, Chief Financial Officer • Joseph Perras, M.D., Chief Medical Officer • Theresa Tabor, Controller • Wendy Fielding, Vice President, Financial Planning Dartmouth-Hitchcock Health
Dartmouth Hitchcock-Health Organizational Chart August 22, 2016 Windsor Hospital Corporation d/ b/ a Mt. Ascutney Hospital And Health Center Mt. Ascutney Mt. Ascutney Historic Homes of Mt. Ascutney Ottaquechee Mt. Ascutney Hospital and Opthalmology Of Professional Health Clinic Community Health Health Center Clinic Runnemede Condo Woodstock, VT Foundation Windsor, VT Hanover, NH Windsor, VT Association Legend Tax Exempt Corporations For Profit Corporations
2 0 1 7 Budget I nitiatives Recognize ongoing changes related to affiliation • • Stable Infrastructure • Changes in Reimbursement Changes in Healthcare Reform • • Strategic Planning
2 0 1 7 Budget I nitiatives ( con’t) Recognize ongoing changes related to affiliation • • Quality • Adopting best practices • Sharing resources (Telemedicine, staffing, etc.) Consolidation of risk, compliance, etc. • • Access (Service Line Planning) • What are necessary community services? • Where are they now? Where should they be? • • Who does it best?
2 0 1 7 Budget I nitiatives ( con’t) Recognize ongoing changes related to affiliation • • Expenses • Benefits (Stop loss, Pension, 403B, Health Benefits) • Purchasing (Insurance/Liability & GPO leverage) Interest • • Depreciation • Revenues • Loss of providers Increase in sub-acute • • Laboratory testing revenues
2 0 1 7 Budget I nitiatives ( con’t) Stable Infrastructure • • Maintain IT and Financial system • Planning for Affiliation changes & Healthcare Reform • Monitoring necessary standards & expectations • Maintain Plant & Equipment • Staffing & Management • Primary Care and necessary support Changes in Reimbursement • • Service Mix (Lab, Rad, Surgery, etc.) • More Sub-acute • More Medicaid (Nursing Home-like Patients)
2 0 1 7 Budget I nitiatives ( con’t) Changes in Healthcare Reform • • Primary Care re-design Tighten Expense Management • • Service Delivery Changes Strategic Planning • • People – wages, benefits, & wellness Service – Primary Care, CARF, & Customer Satisfaction • • Quality – Integration w/D-HH program & SSP measures • Finance – Margin goals for system & self • Programs – Service Line coordination with DHH
Budget Analysis Questions # 1 a Mt. Ascutney continues to integrate with DH-H and this budget reflects that change in reimbursement, staffing, and utilization. Provide the GMCB with an overview of those changes. Explain the challenges and opportunities for MT. Ascutney in the next several years. What are the greatest risks with the 2017 budget? • Changes • Clinical • Financial • Human Resource structures and programs Employment of key positions •
I ntegration w ith Dartm outh-Hitchcock System Clinical • Quality and Safety program consistency and governance • Plan developed for Windsor/Woodstock services • Short-term loss of some surgical and medical specialties; other services coming with goal of most care staying in community Finance • Refinancing of debt, savings on interest • Financial analyst services • Payroll, billing (future) Human Resources Harmonizing policies & procedures • Centralizing recruitment services • • Salary & Benefits (future)
Budget Analysis Questions # 1 b The hospital is also examining other organization shifts with long standing providers in their community such as Stoughton House and Evarts House (licensed by the State of Vermont as residential care homes.) • No changes are in the 2017 budget relative to this possibility • There are no immediate commitments
Budget Analysis Questions # 1 c Describe the integration with D-HH and explain the programmatic and operational shifts that are planned and/or underway. Describe the financial expectations for Mt. Ascutney going forward as it relates to the integration. • CAH’s should perform at 1-2% of operating margin • Capital Spending at 114% of Depreciation Expense • Average Age of Plant 10-13 Years • Entrance in DHOG (Completed 7/1/16) • Master Investment Program (Completed 7/1/16) • Approval process for loans, budgets, partnerships
Budget Analysis Questions # 1 d Describe the savings and costs for the integration that the hospital has experienced. • Interest $150k with refinancing Insurance/Liability Coverage $72k • • Stop Loss Health Insurance $37k • Investment Costs $30k (Below the Line) • GPO costs as an affiliate (DH’s pricing) being implemented currently • FMV Depreciation ($238k) • Increased costs for contracted employees in some cases
Budget Analysis Questions # 2 The hospital’s net patient revenues (NPR) are decreasing 0.7% from 2016 budget. This increase is an estimate based upon numerous utilization changes, reimbursement changes, and continued changes with patients’ insurance coverage and free care…. See next slide…
Budget Analysis Questions # 2 a The hospital shows a change in bad debt from 3% of gross revenues in Budget 2016 to 1% in Budget 2017. Describe those changes. Is free care policy changing? • The hospital had reserved B/D conservatively for our EHR & Financial system conversion as described in previous hearings • Projected FY2016 annualizing at this level Recoveries from B/D have been better than expected • • Self pay as a % of GPR has been reduced 33% over 3 years • We have increased total reserves (C/A’s) – Low risk • No change in the free care policy • Total deductions, net DSH, are up 1.8% from B2016
Budget Analysis Questions # 3 The GMCB is interested in understanding the changes occurring from budget to budget by payer. Explain your NPR changes at the budget hearing using the payer schedule provided in the staff’s analysis. • Commercial reduction is volume/service related Lost good payer mix services, high ticket units of service • • Loss of ENT & Orthopedics • Reduction of Gastroenterology volume with provider retirement • Reductions in Lab volume over last 2 years, good payer mix New ordering protocols, testing, with D-HH Regional Lab Project • Loss of Rheumatologist •
Budget Analysis Questions # 3 The GMCB is interested in understanding the changes occurring from budget to budget by payer. Explain your NPR changes at the budget hearing using the payer schedule provided in the staff’s analysis. • Medicaid increase is volume/service/mix related 2.5% increase in Medicaid as a % of total business in 3 years • • Increase of Medicaid as a % for Rehab, Sub-acute, & Clinic • Offset in part by Medicaid cuts
Budget Analysis Questions # 3 The GMCB is interested in understanding the changes occurring from budget to budget by payer. Explain your NPR changes at the budget hearing using the payer schedule provided in the staff’s analysis. • Medicare reduction is driven by the cost report, volume, and service mix • IP reimbursement being reduced by Medicaid % increase • Swing reimbursement being reduced by Medicaid % increase • Pro reimbursement being reduced by Medicaid % increase • IP Rehabilitation is not cost reimbursed, it’s PPS-based
Budget Analysis Questions # 3 a The narrative discusses numerous shifts occurring in utilization. Describe the shifts the hospital is seeing by payer. Describe the reimbursement impacts as well as impacts on costs. • See previous slides
Budget Analysis Questions # 4 The hospital has budgeted a 2.4% operating loss that will be covered with a transfer from D-HH. Explain the plan here and whether this will be continued going forward. What is the rate of impact if the hospital has to increase rates in lieu of the transfer? • A “System Allocation” payment of $1.2m will be made as a net asset transfer to MAHHC from D-HH “Payment” is below the line, Total Margin will improve • • Functionally, cash, most ratios, ability to invest in infrastructure, etc. will be like an operating margin of $0 • An additional rate increase of 2.8% needed to offset this • Recognizes transition period of service lines allocation
Budget Analysis Questions # 5 Describe the hospital’s efforts with local mental health and other providers to strengthen community health services. Describe any successes and identify limitations of those efforts. • In a prior year budget, we received permission to hire a full time psychiatrist to help address the burden in primary care • While this has helped, there are still needs to be met We have created a mental health providers brochure to improve • access/awareness to local mental health counselors
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